Body Shop customers remain loyal despite L'Oréal takeover

Friday 5 May 2006 19.22 EDT
First published on Friday 5 May 2006 19.22 EDT

There has been no sign so far of Body Shop customers deserting the green toiletries chain after its founder Dame Anita Roddick's decision to sell out to the global cosmetics giant L'Oréal.

Critics of the £650m takeover have focused on the French group's policies on animal testing and had suggested that Body Shop's loyal customers might take their custom elsewhere in protest. But yesterday the 2,000-strong international store chain said like-for-like sales were ahead 5% in recent weeks.

The trading update came as Body Shop, founded more than 30 years ago, announced a 5% increase in profits for the year of £37.6m.

The L'Oréal deal, revealed in March, surprised almost all City analysts. Many believed that Dame Anita - who had publicly criticised L'Oréal and its anti-ageing products - would never agree to such a takeover, especially as L'Oréal is 26% owned by Nestlé, one of the most boycotted companies in the world. Dame Anita had tried to block Unilever's takeover of Ben & Jerry's, the US ice-cream business with an ethical reputation like that of Body Shop.

Other analysts voiced surprise that L'Oréal would want to go into the retail business. Its empire has been built almost solely on brands and its only other retail outlets are a handful of Kiehl's natural cosmetics stores.

Dame Anita and her husband Gordon Roddick cashed in their 18% stake for £117m. The deal will be finalised at the end of this month. Dame Anita plans to use her famous powers of persuasion to encourage L'Oréal to use more raw materials from fair trade sources. She has also pledged to give away her fortune before she dies.

The chairman and chief executive of the retail chain, Adrian Bellamy and Peter Saunders, are to continue running it under its new ownership. Mr Bellamy will receive more than £22m for his 3.4% stake.

A Body Shop spokesman said: "As we can see from current trading, our customers continue to shop with us and buy our ethical products."

The chain had warned on profits after it endured tough trading in Britain and America over Christmas, but that was partly offset by sales elsewhere.